Amazon Ups Minimum Wage to $15 for All Employees Starting Nov 1

Amazon unilaterally upped its minimum wage, even for part-time workers. Now it wants every company to do the same.

The new minimum wage covers more than 250,000 current employees and 100,000 seasonal holiday employees. The new salary increase will also cover part-time and temporary workers hired by agencies.

“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Jeff Bezos, Amazon’s chief executive, in a statement.

Amazon’s current hourly wages vary. According to a survey of job postings, starting pay for such workers can be as low as $10 an hour or as high as $14.

An Amazon spokesman declined to provide its current average starting pay in the U.S. In April, an Amazon spokeswoman told The Wall Street Journal it had been paying its full-time U.S. warehouse workers an average hourly wage of more than $15, though that included stock and incentive bonuses.

Previously, Amazon’s starting wages have ranged based on where workers are located. For example, a current job posting for a full-time warehouse worker in Omaha, Neb., starts at $12.25 an hour, while a similar job in Madison, Wis., starts at $11. Part-time workers doing customer service from home start at $10 an hour.

Bottom Line Profits

A 50-cent raise an hour across 250,000 employees, for example, would imply a post-tax impact on operating profit of roughly $200 million, or 1% or 2%, according to Colin Sebastian, an analyst with Robert W. Baird & Co.

Amazon’s wage increase may cause some financial pressure over the next year and a half, said Youssef Squali, internet analyst with SunTrust Robinson Humphrey Inc. But Amazon has never been about profitability, “it’s historically been about growth, growth, growth,” he added.

Amazon Share

Amazon has already been in the crosshairs of the White House when it comes to threats of antitrust investigations, and while some say this is simply Trumpian bluster that has a slim chance of going anywhere, some new numbers out from the researchers at eMarketer could prove to be a fan to the flames.

Amazon is set to clear $258.22 billion in US retail sales in 2018, according to eMarketer’s figures, which will work out to 49.1 percent of all online retail spend in the country, and 5 percent of all retail sales.

It started as an online bookstore, but today Amazon is a behemoth in all areas of e-commerce, fuelled by a strong Marketplace network of third-party sellers, an ever-expanding range of goods from groceries to fashion, and a very popular loyalty program in the form of Prime.

Now, it is fast approaching a tipping point where more people will be spending money online with Amazon, than with all other retailers — combined.

10% Share of All Retail in 2 Years

Shot Heard Round the World

Sanders Cheers

Minimum Wage Lobbying

So that competitors do not have a wage advantage, Amazon will lobby Congress for an increase in the federal minimum wage, currently $7.25 an hour.

Many retailers are already struggling. JC Penny is on the bankruptcy ropes.

What's Going On?

Is this a calculated ploy by Bezos to further pressure the competition or is Bezos simply paying more because Amazon struggles to hire competent workers? Is fear of Trump in play?

One thing's for sure: Bezos expects to gain something out of this. That is not a bad thing, just a statement of fact.

Here's a second sure thing: Pressure will be immense on other retailers to follow.

Mike "Mish" Shedlock

Comments
No. 1-13
Advancingtime
Advancingtime

Now that the latest jobs data has been released it might be a good time to take a look at jobs, automation, and issues related to raising the minimum wage. Recently Amazon has been under a great deal of criticism for low pay and the harsh treatment of its workers so it should not come as a surprise that Bezos a proven master of hype and re-framing issues has announced his company will be increasing wages.

Amazon also said it will start lobbying for an increase in the federal minimum wage, currently at $7.25 an hour. This translates into "while we move towards automation and utilizing more robots we will try to raise cost for our smaller competitors to put them out of business." The article below argues the unpopular view that simply raising the minimum wage without a corresponding rise in productivity does not work.

AWC
AWC

Will it be enough to trigger Animal Spirits? Certainly, if it spreads through the system. There will need to be 7-9% devaluation or the pension and entitlement systems will implode. What Ever it Takes. Next up, Universal Basic Income?

Brother
Brother

Half of 550,000 Amazon employee's are in that pay wage. Read this as a sensitivity move.

KidHorn
KidHorn

If the national minimum wage is raised to $15/hr, Amazon stands to benefit immensely. It will hurt their competition much more than them since they fulfill from gigantic warehouses that can more easily be automated. Wal-Mart can't replace floor workers with robots. Too many customers getting in the way and who will answer questions?

I've been buying less and less from Amazon because I can buy most of the same stuff from Wal-Mart or Home Depot's web site for less and they have free shipping too.

Blacklisted
Blacklisted

The majority of warehouse jobs are being replaced by robots, so the # getting min wage will be insignificant.

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